What’s inside:
- ECB meeting today puts us on high volatility alert
- Bearish short-term chart sequence could take hold, but…
- If market can rally and hold above the Monday reversal high, then next zone of resistance comes into view
Markets have been relatively quiet from Asia to Europe trade so far. The DAX being no different. That could change later after the European Central Bank announcement at 11:45 GMT, where the ECB is expected to make no adjustments, but could lay the foundation for additional changes to come later in the year. For further insight on today's meeting, check out this commentary from my colleague, Chris Vecchio.
Looking to the technical foundation, earlier this morning the DAX attempted to rally beyond the reversal day high which came above the 10000/100 resistance zone, but has failed to hold above thus far. If the market closes back below the reversal day high and into or below the previously mentioned resistance zone, then we could see validation of a formation developing on the short-term chart – a broadening top. This developing pattern could be in place on the short-term chart with this morning’s push to a new swing high and subsequent failure. If this is to be the case, the market should move back towards 9900, and lower fairly soon. But as the name suggests, the pattern could continue to broaden by expanding towards the 10250/350 resistance zone.
On the flip-side, if the advance can continue above 10165, the next zone of resistance comes at a confluence of resistance between roughly 10250 up to 10350. In that zone there is a trend-line running lower off the April peak, horizontal resistance from May and June, as well as a back-side test of the broken 2011 trend-line. The broadening pattern could still be in tact at that juncture as well.
DAX (Ger30) Daily
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX.
